8.f)1) Request for Proposals, Audit Services Meeting Date: 7/19/2011
Agenda Item: (;_ ;J ��
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City Council Agenda Report
City of Scandia
14727 209th St. North
Scandia, MN 55073 (651) 433-2274
Action Requested: Review and authorize release of a request for proposals (RFP) for
audit services for 2011, 2012 and 2013.
Deadline/Timeline: Proposed schedule:
Issue RFP: August 1
Responses due: September 14 (4 p.m.)
Review of proposals/interviews: September/October
Selection of firm by Council: October 18 or November 15
Background: • At the June 21 meeting, the Council directed staff to prepare a
Request for Proposals for audit services for 2011, 2012 and 2013.
• The draft RFP has been prepared based on the proposal issued in
2007 and updated in 2010 (never issued) which was based on a
model from GFOA, and examples obtained from other cities.
Recommendation: The Council should review the RFP and request any desired changes,
then approve it for release.
Attachments/ • Draft Request for Proposals
Materials provided:
Contact(s):
Prepared by: Anne Hurlburt, Administrator
(audit rfp)
Page 1 of 1
07/08/11
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SC DIA
.
REQUEST FOR PROPOSALS
FOR
PROFESSIONAL AUDITING SERVICES
AUGUST, 2011
City of Scandia
14727 209T" St. N.
Scandia, Minnesota 55073
Anne Hurlburt, City Administrator
Phone (651)433-2274
Fax (651)433-5112
a.hurlburt(a�ci.scandia.mn.us
www.ci.scandia.mn.us
CITY OF SCANDIA
REQUEST FOR PROPOSALS
TABLE OF CONTENTS
I. GENERAL INFORMATION (Page 3)
A. Term of Engagement
B. Subcontracting
II. NATURE OF SERVICES REQUIRED (Page 3)
A. General
B. Scope of Work to be Performed
C. Auditing Standards to be Followed
D. Reports to be Issued
E. Working Paper Retention and Access to Working Papers
III. DESCRIPTION OF GOVERNMENT (Page 5)
A. Principal Contacts
B. Background Information
C. Pension Plans
IV. TIME REQUIREMENTS (Page 6)
A. Proposal Calendar
B. Schedule for 2011 Fiscai Year Audit
V. AUDIT RESPONSIBILITIES (Page 6)
A. City Staff Assistance
B. Work Area and Equipment
C. Report Preparation
D. State Reporting
VI. PROPOSAL REQUIREMENTS (Page 7)
VII. TECHNICAL PROPOSAL (Page 7)
A. General Requirements
B. Independence
C. License to Practice in Minnesota
D. Firm Qualifications and Experience
E. Partner, Supervisory and Staff Qualifications and Experience
F. Similar Engagements with Other Government Entities
G. Specific Audit Approach
VIII. DOLLAR COST PROPOSAL (Page 9)
A. Total All-Inclusive Maximum Price
IX. EVALUATION PROCEDURES (Page 10)
A. Review of Proposal
B. Evaluation Criteria
C. Oral Presentation
D. Right to Reject Proposals
APPENDICES (Page 12)
A. Proposer Guarantees
B. Fee Schedule
City of Scandia,Request for Proposals 2
Professional Auditing Services,August 2011
CITY OF SCANDIA
REQUEST FOR PROPOSAL
I. GENERAL INFORMATION
The City of Scandia is requesting proposals from quatified firms of certified public accountants
to audit its financial statements for the fiscal years ending December 31, 2011, December 31,
2012, and December 31, 2013. These audits are to be performed in accordance with the
generally accepted auditing standards and the standards for financial audits set forth in the U.S.
General Accounting Office's (GAO) Government Auditing Standards (1988) and State Legal
Compliance audit requirements.
There is no expressed or implied obligation for the City of Scandia to reimburse responding
forms for any expenses incurred in preparing proposals in response to this request. The City of
Scandia reserves the right to retain all proposals submitted and to use any ideas in a proposal
regardless of whether that proposal is selected. Submission of a proposal indicates acceptance
by the firm of the conditions contained in this request for proposals, unless clearly and
specifically noted in the proposal submitted and confirmed in the contract between the City of
Scandia and the firm selected.
A. Term of Engagement
A three-year contract is contemplated, subject to the annual review by the Scandia City Council
and the annual availability of an appropriation.
B. Subcontracting
No subcontracting will be allowed without the express prior written consent of the City of
Scandia.
II. NATURE OF SERVICES REQUIRED
A. General
The City of Scandia is soliciting the services of qualified firms of certified public accountants to
audit its financial statements for the fiscal years ending December 31, 20010, December 31,
2011, and December 31, 2012.
B. Scope of Work to be Performed
The City of Scandia desires the auditor to express an opinion on the fair presentation of its
general purpose financial statements in conformity with generally accepted accounting
principles.
The auditor shall also be responsible for perForming procedures involving required
supplementary information required by the Governmental Accounting Standards Board (GASB)
as mandated by generally accepted auditing standards (GAAP). Assistance will be provided to
the City for implementing GASB Statement No. 51, Accounting and Financia/Reporting for
Intangible Assets, effective 2010, and Statement No. 54, Fund Ba/ance Reporting and
Governmental Fund Type Definitions, effective 2011.
City of Scandia,Request for Proposals 3
Professional Auditing Services,August 2011
C. Auditing Standards to be Followed
To meet the requirements of this request for proposal, the audit shall be performed in
accordance with generally accepted auditing standards as set forth by the American Institute of
Certified Public Accountants, the standards for financial audits set forth in the US General
Accounting Office's Government Auditing Standards (1994), the provisions of the Single Audit
Act of 1996, the provisions of US Office of Management and Budget(OMB) Circular A-133, and
the provisions of the MN Legal Compliance Audit Guide for Local Government(pursuant to MN
Statute 6.65).
D. Reports to be Issued
Following the completion of the audit of the fiscal year's financial statements, the auditor shall
issue the following reports:
1. A report consisting of the Annual Financial Statements and Supplemental Information.
2. Combined and individual fund statements.
3. A report on the fair presentation of the financial statements in conformity with generally
accepted accounting principles.
4. A report on compliance and on internal control over financial reporting based on an audit of
financial statements.
5. A report on compliance with applicable laws and regulations.
6. The reports on compliance shall include all instances of noncompfiance.
7. Reportable conditions that are also material weaknesses shall be identified as such in the
report.
8. Non-reportable conditions discovered by the auditors shall be reported in a separate Letter to
Management which shall be referred to in the report(s) on internal controls.
Auditors shall assure themselves that the City Administrator and City Council is informed of
each of the following:
a. The auditor's responsibility under generally accepted auditing standards
b. Significant accounting policies
c. ManagemenYs judgments and accounting estimates
d. Significant audit adjustments
e. Other information in documents containing audited financial statements
f. Disagreements with management
g. Management consultation with other accountants
h. Major issues discussed with management prior to retention
i. Difficulties encountered in performing the audit
j. Legal compliance findings
k. Significant deficiencies
I. Control deficiencies
m. Management recommendations
n. Financial analysis
o. Update of resolved (and unresolved) issues from prior years
City of Scandia,Request for Proposals 4
Professional Auditing Services,August 2011
Auditors shall be required to make an immediate, written report of all irregularities and illegal
acts or indications of illegal acts of which they become aware to the City Administrator and to
the City Council.
E. Working Paper Retention and Access to Working Papers
All working papers and reports must be retained, at the auditor's expense, for a minimum of
three (3) years, unless the firm is notified in writing by the City of Scandia of the need to extend
the retention period. The auditor will be required to make working papers available, upon
request, to the following parties or their designees: City of Scandia, State Auditor, US General
Accounting Office (GAO), parties designated by the federal or state governments or by the City
of Scandia as part of an audit quality review process.
In addition, the firm shall respond to the reasonable inquiries of successor auditors and allow
successor auditors to review working papers relating to matters of continuing accounting
significance.
III. DESCRIPTION OF GOVERNMENT
A. Principal Contacts
The auditor's principal contacts will be the City Administrator(Anne Hurlburt) and City Treasurer
(Colleen Firkus)who will coordinate the assistance to be provided by the City of Scandia to the
auditor.
B. Background Information
The City of Scandia is located in Washington County, Minnesota. The City is approximately 39
square miles in area. The most recent official population estimate is 3,936 (2010 Census).
Scandia was incorporated on January 1, 2007 from the former New Scandia Township. The city
operates under Minnesota Statutes "Plan A" form of government. The City's governing body
consists of a Mayor and four Council members, all elected at large. Council members serve
overlapping terms of office.
The City consists of the following departments: Administration, Zoning/Building Inspections,
Public Works, and Fire. The city contracts for police, engineering, legal and planning services,
and for the operation of a community sewage system (201 Project) on Big Marine Lake (with
Washington County.) The city currently has four full-time employees (Administrator/Clerk,
Building/Code Enforcement Official/Public Works Supervisor, and two Maintenance Workers.
There are four regular part-time employees (Deputy Clerk, Treasurer, Office Assistant, and
Recreation Program Coordinator.) Various seasonal and temporary employees supplement the
staff from time-to-time. The Fire Department is primarily paid on call, with a small stipend paid
to officers.
The City's fiscal year is the calendar year. Banyon Data Systems software is used for all
financial operations.
An electronic copy of the most recent audit of the City (for the year ending 12/31/10) is available
for download on the city's website (www.ci.scandia.mn.us.)
City of Scandia,Request for Proposals 5
Professional Auditing Services,August 2011
C. Pension Plans
The City of Scandia participates in the following pension plans:
Public Employees Retirement Association of Minnesota
Statewide Volunteer Firefighter Retirement Plan administered by PERA (effective
January 1, 2011)
The city's only post-retirement obligation as defined by GASB 45 is the state-directed health
coverage retirement options under MN Statutes Chapter 471.
IV. TIME REQUIREMENTS
A. Proposal Calendar
The following is a list of key dates up to and including the date proposals are due to be
submitted:
August 1, 2011 Request for proposal issued
September 14, 2011 Due date for proposals
September/ October 2011 Interviews with selected firms
October 18 or November 15, 2011 City Council selection
B. Schedule for the 2011 Fiscal Year Audit
In December 2011 a preliminary meeting will be held to discuss any potential audit problems
and the interim work to be performed and to develop a schedule for the audit process.
The City of Scandia will have all records ready for audit and all management personnel
available to meet with the firm's personnel in February of 2012. The auditor shall complete all
field work by March 15, 2012, unless otherwise agreed upon by City Staff.
The auditor shall have drafts of the audit report(s) and recommendations to management
available for review April 15, 2012, unless otherwise agreed upon by City Staff.
City staff will complete their review of the draft reports as expeditiously as possible. It is not
expected that this process should exceed two weeks. During that period, the auditor should be
available for any meetings that may be necessary to discuss the audit reports. Once all issues
for discussion are resolved, the final signed report shall be delivered to the City of Scandia
within ten working days, but not later than one week prior to the exit meeting with the City
Council. The exit meeting with City Council will be held no later than the first Council meeting
in June 2012.
City staff and the audit firm may hold a final wrap-up meeting following the Council meeting.
This should be held within 30 days following that meeting.
A similar time schedule will be developed for audits of future fiscal years.
V. AUDIT RESPONSIBILITIES
A. City Staff Assistance
City staff will be available during the audit to assist the firm by providing information,
documentation and explanations.
City of Scandia,Request for Proposals 6
Professional Auditing Services,August 2011
B. Work Area and Equipment
The City of Scandia will provide the auditor with reasonable workspace, tables and chairs. The
auditor will also be provided with access to a telephone, photocopier/scanner/FAX machine, and
an internet connection.
C. Report Preparation
Report preparation and editing shall be the responsibility of the auditor, including any visual
presentations for the City Council. The City of Scandia will require an official copy of the final
audit report as well as an electronic(i.e. PDF) copy. Ten paper copies shall be produced for the
city's use.
D. State Reporting
The auditor shall complete all forms mandated to be sent to the state for reporting purposes.
VI. PROPOSAL REQUIREMENTS
The Proposer shall submit ten (10) originals and an electronic copy (emailed) of the completed
proposal to:
Anne Hurlburt, City Administrator
City of Scandia
14727 209th Street N
Scandia MN 55073
Email: a.hurlburt(a�ci.Scandia.mn.us
The proposal shall include:
1. Title Page--Title page showing the request for proposal subject; the firm's name,
address, email, and telephone number of the contact person; and the date of the
proposal.
2. Table of Contents
3. Transmittal Letter-- A signed letter of transmittal briefly stating the proposer's
understanding of the work to be done, the commitment to perform the work within the
time period, a statement why the firm believes itself to be best qualified to perform the
engagement and a statement that the proposal is a firm and irrevocable offer for 60
days.
4. Detailed Proposal-- The detailed proposal should follow the order set forth in Sections
VII and VIII of this request for proposals.
5. Executed copies of Proposer Warranties (Appendix A).
6. Schedule of Proposed Fees for 2011, 2012 and 2013 audits (Appendix B).
The City of Scandia reserves the right, where it may serve the city's best interest, to request
additional information or clarifications from the proposers. At the discretion of the City, firms
submitting proposals may be requested to make oral presentations as part of the evaluation
process.
VII. TECHNICAL PROPOSAL
A. General Requirements
The purpose of the Technical Proposal is to demonstrate the qualifications, competence and
capacity of the firms seeking to undertake an independent audit of the City of Scandia in
conformity with the requirements of this request for proposal. The Technical Proposal should
City of Scandia,Request for Proposals 7
Professional Auditing Services,August 2011
demonstrate the qualifications of the firm and of the particular staff to be assigned to this
engagement. It should also specify an audit approach that will meet the request for proposal
requirements.
The Technical Proposal should be prepared simply and economically, providing a
straightforward, concise description of the proposer's capabilities to satisfy the requirements of
the request for proposal. While additional data may be presented, the following subjects, Item
Nos. B through G must be included. They represent the criteria against which the proposal will
be evaluated.
B. Independence
The firm should provide an affirmative statement that it is independent of the City of Scandia as
defined by generally accepted auditing standards of the US General Accounting Office's
Auditing Standards (1994).
The firm should also list and describe the firm's professional relationships involving the City of
Scandia or any of its agencies for the past five years, together with a statement explaining why
such relationships do not constitute a conflict of interest relative to performing the proposed
audit. In addition, the firm shall give the City of Scandia written notice of any relevant
professional relationships entered into during the period of this agreement.
C. License to Practice in Minnesota
An affirmative statement should be included that the firm and all assigned key professional staff
are properly licensed to practice in Minnesota.
D. Firm Qualifications and Experience
The proposer should state the size of the firm, the size of the firm's governmental audit staff, the
location of the office from which the work on the engagement is to be performed and the
number and nature of the professional staff to be employed in this engagement on a full-time
basis, the number and nature of the staff to be so employed on a part-time basis, and the
number and nature of the staff to be so employed on a temporary basis.
The firm shall also provide information on the results of any federal or state desk reviews of its
audits during the past three years. In addition, the firm shall provide information on the
circumstances and status of any disciplinary action taken or pending against the firm during the
past three years with state regulatory bodies or professional organizations. The firm should
provide a list of government-related references that the City can contact.
E. Partner, Supervisory and Staff Qualifications and Experience
Identify the principal supervisory and management staff, including engagement partner,
managers, other supervisors and specialists, who would be assigned to the engagement.
Indicate whether each such person is licensed to practice as a certified public accountant in
Minnesota. Provide information on the government auditing experience of each person and
overall experience of each person.
Provide as much information as possible regarding the number, qualifications and experience of
the specific staff to be assigned to this engagement. Indicate how the quality of the staff, over
the term of the engagement, will be assured.
Engagement partners, managers, other supervisory staff, and specialists may be changed if
those personnel leave the firm, are promoted, or are assigned to another office.
City of Scandia,Request for Proposals $
Professional Auditing Services,August 2011
The City of Scandia must be notified in writing if consultants and firm specialists mentioned in
response to this request for proposal would be changed. Notification shall be done prior to any
such change.
Other audit personnel may be changed at the discretion of the proposer provided that
replacements have substantially the same or better qualifications or experience.
F. Similar Engagements with Other Government Entities
For the firm's office that will be assigned responsibility for the audit, list the most significant
engagements (minimum of 3, maximum of 5) performed in the last three years that are similar to
the engagement described in this request for proposal. These engagements should be ranked
on the basis of total staff hours. Indicate the scope of work, date, engagement partners, total
hours, and the name and telephone number of the principal client contact. For city
engagements, indicate whether or not the Comprehensive Annual Financial Report received the
GFOA Certificate of Achievement for the most recent audit.
G. Specific Audit Approach
The proposal should set forth a work plan, including an explanation of the audit methodology to
be followed, to perForm the services required in Section II of this request for proposal. The
proposal should include sample formats for required reports.
VIII. DOLLAR COST PROPOSAL
A. Total All-Inclusive Maximum Price
The dollar cost proposal should contain all pricing information relative to performing the audit
engagement as described in this request for proposal. The total all-inclusive maximum price to
be bid is to contain all direct and indirect costs including all out-of-pocket expenses.
The audit contract is to include telephone inquiries and other assistance related to the audit and
future audits requiring a minimum amount of time.
The City of Scandia will not be responsibte for expenses incurred in preparing and submitting
the technical proposal or the dollar cost proposal. Such costs should not be included in the
proposal.
The first page of the dollar cost proposal should include the following information:
1. Name of Firm
2. Certification that the person signing the proposal in entitled to represent the firm,
empowered to submit the bid, and authorized to sign a contract with the City of Scandia
3. A total all-inclusive Maximum Price for the 2011, 2012 and 2013 engagements.
The second page of the dollar cost bid should include a schedule of professional fees and
expenses, presented in the format provided in the attachment (Appendix B) that supports the
total all-inclusive maximum price.
Any out-of pocket expenses including those for firm personnel for its employees shall be
included in the total all-inclusive maximum price submitted by the firm.
City of Scandia,Request for Proposals Q
Professional Auditing Services,August 2011
If it should become necessary for the City of Scandia to request the auditor to render any
additional services to either supplement the services requested in the RFP or to perform
additional work as a result of the specific recommendation included in any report issued on this
engagement, then such additional work shall be performed only if set forth in an addendum to
the contract between the City of Scandia and the firm. Any such additional work agreed to
between the City of Scandia and the firm shall be performed at the same rates set forth in the
schedule of fees and expenses included in the dollar cost proposal.
Progress payments may be made on the basis of hours of work completed during the course of
the engagement incurred in accordance with the firm's dollar cost proposal. Interim billing shall
cover a period of not less than a calendar month. Payment of final billing will be held pending
delivery of the firm's final reports. Should the selected auditor not make any deadlines set forth
in this proposal, payment shall atso be held.
Detail spreadsheets shall be made available that verify the billing for the period billed. An
electronic copy would be preferred. Line items that should be shown on the spreadsheet
include: service date and time, employee name, rate, time billed, amount billed, description of
work performed, and any miscellaneous expenses associated with the audit. Spreadsheet
should also include any hours or expenses that are part of the audit but not billed.
IX. EVALUATION PROCEDURES
A. Review of Proposal
The City of Scandia reserves the right to retain all proposals submitted and use any idea in a
proposal regardless of whether that proposal is selected.
B. Evaluation Criteria
Proposals will be evaluated using three sets of criteria. Firms meeting the mandatory criteria
will have their proposals evaluated for both technical qualifications and price. The selection
process will include, but not be limited to, the following criteria:
1. Mandatory Elements
a) The audit firm is independent and licensed to practice in Minnesota.
b) The firm has no conflict of interest with regard to any other work performed by
the firm for the City of Scandia.
c) The firm adheres to the instructions in this request for proposal on preparing
and submitting the proposal.
d) The firm submits a copy of its last external quality control review report and
the firm has a record of quality audit work.
2. Technical Quality
a) Expertise and Experience
1) The firm's past experience and perFormance on comparable
government engagements.
2) The quality of the firm's professional personnel to be assigned to the
engagement and the quality of the firm's management support
personnel to be available for technical consultation.
b)Audit Approach
1) Adequacy of proposed staffing plan for various segments of the
engagement
City of Scandia,Request for Proposals 10
Professional Auditing Services,August 2011
.
2) Adequacy of sampling techniques
3) Adequacy of analytical procedures
3. Price-- Cost will be a factor in the selection of an audit firm. However, price will not
be the sole determining factor in the selection process.
C. Oral Presentation
During the evaluation process, the City may, at its discretion, request one or all firms to make an
oral presentation. Such presentation will provide firms with an opportunity to answer any
questions the City may have on a firm's proposal. Not all firms may be asked to make such oral
presentation.
D. Right to Reject Proposals
The City of Scandia reserves the right without prejudice to reject any or all proposals.
Submission of a proposal indicates acceptance by the firm of the conditions contained in this
request for proposal unless clearly and specifically noted in the proposal submitted and
confirmed in the contract between the City of Scandia and the firm selected.
City of Scandia,Request for Proposals 11
Professional Auditing Services,August 2011
APPENDIX A
CITY OF SCANDIA
PROPOSER GUARANTEES
Proposer warrants that it is willing and able to comply with State of Minnesota laws with respect
to foreign (non-state of Minnesota) corporations.
Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy
providing a prudent amount of coverage for the willful or negligent acts or omissions of any
officers, employees or agents thereof.
Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement
without the prior written permission of the City of Scandia.
The proposer certifies that it can and will provide and make available at a minimum, all services
set forth in Section II, Nature of Services Required.
Proposer warrants that all information provided in connection with this proposal is true and
accurate.
Signature of Official:
Name (typed or printed):
Title:
Firm:
Date:
City of Scandia,Request for Proposals 12
Professional Auditing Services,August 2011
f
APPENDIX B
CITY OF SCANDIA
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES FOR THE AUDIT OF THE 2011,
2012 AND 2013 FINANCIAL STATEMENTS
2011 2012 2013
Proposed Proposed Proposed
Hourly Hourly Hourly
Hours Rates Rates Rates Total
Personnei Costs:
Partners $
Mana ers $
Supervisory Staff $
Other Personnel
Specif $
Subtotal: �
Other:
Re ort Pre /Processin $
Single Audit Cost (A-
133 $
Prepare Report of Fin
Stmts & Su Info $
Process State-
mandated Re orts $
Out-of-Pocket
Ex enses $
Meals and
Lod in $
Transportation/
Milea e $
Other
S ecif $
Subtotal: $
Total All-inclusive
Price for Audit
Services $
City of Scandia,Request for Proposals 13
Professional Auditing Services,August 2011
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City of Scandia,Request for Proposals 14
Professional Auditing Services,August 2011